In response to ongoing changes in the banking industry, Moody’s continues to enhance its bank rating methodology in order to maintain the relevance and accuracy of Moody’s credit analysis and ratings. With many countries adopting resolution regimes to handle bank failures, bank counterparty risk has evolved. To provide additional clarity and meet this distinct market need, Moody’s has introduced the Counterparty Risk Rating.

New: Corporate Governance in Bank Ratings Infographic

As part of Moody’s bank rating methodology, governance is assessed under a Corporate Behavior framework. Moody’s currently applies Corporate Behavior adjustments to 75 banks globally, most of which are negative.

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Counterparty Risk Rating (CRR)

Moody's Counterparty Risk Rating

Find out how Moody’s Counterparty Risk Rating completes Moody’s bank rating architecture.

Bank Methodology Overview

Moody’s approach starts by analyzing a banks intrinsic or standalone strength, without external support, and assigning a Baseline Credit Assessment.

In the Support & Structural Analysis component, consideration is given to the potential for external or Affiliate Support, the expected loss in the event of a default or bank failure, the Loss Given Failure, and the likelihood of Government Support.

Click on the components below to learn more.

baseline credit analysis
Macro
Profile
Financial
Profile
Qualitative
Judgements
Baseline Credit
Assessment
support & structural analysis
Affiliate
Support
Adjusted
BCA
Loss Given Failure
Liability Analysis
Government
Support
Final Credit
Rating

Bank Rating Methodology Explained

An introduction to Moody's Bank Rating Methodology.

What Bank Ratings Mean

Baseline Credit Assessment (BCA)

Our Baseline Credit Assessment (BCA) has three main components: a macro profile, financial factors and qualitative factors.

Macro Profile
An assessment of the bank’s operating environment.
Overview
Financial Profile
Predictive measures of solvency and liquidity.
overview
Qualitative Factors
Adjusting the financial profile by incorporating relevant factors.
overview
Baseline Credit Assessment
A measure of default probability excluding external support.
overview

Support & Structural Analysis

Our Support & Structural Analysis assesses the probability of external support from an affiliate or government entity.

Affiliate Support
Adjusting the BCA to incorporate support from affiliated entities.
overview
Loss Given Failure
A liability-side analysis that assesses the impact of a failure – in terms of the potential loss on rated debt and deposits.
overview
Government Support
Our judgment about the probability of a government to provide support.
overview
Adjusted Baseline Credit Assessment
A measure of the probability that a bank will require support to avoid default beyond the support provided by its affiliates.
overview
CONTACT US
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